Dow stock Caterpillar and two others could propel the index to 25,000

Now that the Dow has blown past 24,000, Evercore ISI’s Rich Ross has three stocks that could take the index to 25K.

The DJIA on Thursday posted its second best day of 2017, and has now seen eight-straight months of gains, something the Dow has not done since 1995.

“I’ve got three great stocks for you. Two of them are strong and one of them is weak, but they can all outperform next year,” Ross said Thursday on CNBC’s “Trading Nation.”

Ross’ top pick is UnitedHealth Group.

According to Ross, the long-term weekly chart illustrates the stock’s ability to stay above a critical trend line and looks positioned to continue the uptrend. “You’ve held that 100-week moving average, which has defined the trend. For over eight years, a remarkable run of success, and I think that run continues.”

UnitedHealth shares are surging more than 42 percent this year and closed at an all-time high on Thursday.

Caterpillar is Ross’ second pick.

“I think it’s poised for another big year next year,” he said.

Caterpillar is the second best-performing Dow stock in 2017, and Ross credited to the company’s success this year to reflation. “Caterpillar is a big beneficiary of many of the big themes that are driving not just the markets here in the U.S. but on a global basis [as well]. Reflation without inflation gives us elation,” Ross said.

Shares of Caterpillar are at record highs and are up more than 52 percent in 2017.

As his third pick, Ross pointed to a Dow laggard that he thinks could see a resurgence in 2018: Chevron.

“We’re up off of the lows, but we’re sort of flat year-to-date and really underperforming [the broader market] fairly dramatically,” Ross said.

Chevron stock is up 1 percent in 2017, while the S&P 500 has rallied more than 18 percent.

Nevertheless, Ross thinks that in 2018, many of the big energy stocks are poised for a comeback. “I think oil can break out next year. You’ve already seen a resurgence, and when the calendar turns, people are going to look at energy through a different lens. Chevron and some of the other big integrated [stocks] are going to outperform into next year,” Ross said.